The Health Minister James Reilly says €26m, which has already been spent on the Mater site to date, will not now be recovered.

Construction at St James’s is expected to be completed by early 2018.

Minister Reilly says the new site offers scope for the building not only of a children's hospital but also of a new maternity hospital in the future.

He added that it provides a much better alternative to the previously chosen Mater site.

“The reality is that the planning risk at the Mater is still too high and because of the small size of the site

“St James’s offers a site of 6.3 hectares, which is considerably more than the site available at the Mater and allows for a much lower building. We have plenty of room for not just a paediatric hospital but in the future a maternity hospital.”

Speaking at the announcement of the decision at a press conference in government buildings, Minister Reilly added: "There is no building project to which the government attaches a greater importance. A nation can be judged on the treatment of its children. This government regards the building of the new children’s hospital as a key priority and no effort will be spared in expediting its completion”.

Minister Frances Fitzgerald echoed those comments, saying: “The greatest duty of government is the care of citizens. Nowhere is that more true than in the case of sick children. We have taken the greatest care to make the right decision today - a decision that gives the greatest confidence of delivering this much needed hospital”.